PH to sus­tain FDI in­flows, BSP says

Sun.Star Cebu - - BUSINESS - JEANDIE O. GALOLO / Re­porter @Je­andieee

De­spite dou­ble-digit de­clines in for­eign di­rect in­vest­ments (FDI) in the first seven months of the year, the Bangko Sen­tral ng Pilip­inas (BSP) re­mains bullish that sus­tained net in­flows could reach close to $8 bil­lion in 2017.

This is sim­i­lar to what was recorded last year, with prospec­tive in­vest­ments seen in the man­u­fac­tur­ing sec­tor, in­clud­ing elec­tron­ics and mo­tor parts.

In a state­ment re­leased Thurs­day, BSP said its FDI prospects to the Philip­pines con­tinue to be fa­vor­able, marked by a “sub­dued global eco­nomic growth, and sus­tained ro­bust macroe­co­nomic per­for­mance and in­vest­ment grade sta­tus.”

Lat­est de­vel­op­ments in the coun­try’s FDIs have be­come a con­cern, par­tic­u­larly the de­cline ob­served in the first se­mes­ter of 2017. As re­ported by the BSP, FDIs reg­is­tered net in­flows of $3.6 bil­lion in Jan­uary-June 2017, or 14 per­cent lower than the $4.2 bil­lion net in­flows recorded in the same pe­riod last year.

In ad­di­tion, the re­cently re­leased July 2017 FDI out­turn brought the first seven months net FDI level to $3.9 bil­lion, or 16.5 per­cent lower than pre­vi­ous year’s level. The net in­flow for the month of July alone reached $307 mil­lion, said to be the low­est monthly level since it hit $238 mil­lion in FDIs in June 2016.

BSP at­trib­uted the lower net in­flows in the first se­mes­ter to the 90.3-per­cent de­cline in net eq­uity cap­i­tal, or new in­vest­ments of for­eign firms in the Philip­pines, to $141 mil­lion from $1.4 bil­lion a year ago. In 2016, the cen­tral bank saw large in­vest­ment flow com­ing from fi­nan­cial and the in­sur­ance in­dus­try.

“The de­cline in net eq­uity cap­i­tal was, how­ever, off­set in part by higher in­vest­ments in debt in­stru­ments and rein­vest­ment of earn­ings amount­ing to $3 bil­lion and $416 mil­lion, re­spec­tively,” it added.

Amid the drop, the Na­tional Eco­nomic and De­vel­op­ment Au­thor­ity (Neda) as­sured that the for­eign in­vestors re­main con­fi­dent to do busi­ness in the Philip­pines. In a state­ment, it dis­missed con­cerns raised by Se­nate mi­nor­ity leader Franklin Drilon on de­clin­ing eq­uity place­ments.

Eq­uity place­ments dropped 61.4 per­cent to $641 mil­lion from Jan­uary to July 2017 ver­sus the $1.66 bil­lion in the same pe­riod last year. On the other hand, eq­uity with­drawals grew dur­ing the said pe­riod at $369 mil­lion from $189 mil­lion last year.

Neda, how­ever, ex­plained that the fig­ure on for­eign eq­uity place­ments is not the en­tire fig­ure.

“While the data on eq­uity place­ments serve as a gauge of new FDI en­try and over­all in­vestor con­fi­dence, the fig­ure is not com­plete. The fig­ure does not show the to­tal in­ward in­vest­ments made by for­eign in­vestors in the coun­try,” Neda Of­fi­cer-in-Charge, Un­der­sec­re­tary Rolando G. Tungpalan said.

To at­tract more FDIs, Neda said it ex­haust­ing all mea­sures to im­prove the busi­ness cli­mate, par­tic­u­larly eas­ing for­eign re­stric­tions on sev­eral ar­eas of busi­ness through the for­eign in­vest­ment neg­a­tive list (see sep­a­rate story).

BSP pointed out that re­forms on for­eign own­er­ship, ad­dress­ing in­fra­struc­ture gaps, and re­duc­ing the cost of do­ing busi­ness to boost FDI in the coun­try.

While the data on eq­uity place­ments serve as a gauge of new FDI en­try and over­all in­vestor con­fi­dence, the fig­ure is not com­plete. ROLANDO G. TUNGPALAN Neda Un­der­sec­re­tary

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